Peter Cosgrove: Life and times

Mr Abbott has paid tribute to General Cosgrove's long military service, saying he cannot think of a better person to take on the role of governor-general.

"He has given service of the very highest order to our country," Mr Abbott said.

"I am confident that in this new role he will continue to deliver to a grateful nation leadership beyond politics.

"I can't think of a better way to start the year, and I can't think of a better person to do this very important job."

In announcing the appointment, Mr Abbott thanked Ms Bryce, saying she has discharged her duties with grace and distinction.

Ms Bryce copped criticism in November when she publicly backed the idea of Australia becoming a republic and came out in support of same-sex marriage.

General Cosgrove says he intends to leave the "vexed political issues" to elected MPs.

"I think your responsibility is to shine light, but not to generate heat," he said.

"I think you've got to listen a lot and take in everything that you see, but you're not a participant in the political process."

On the issue of whether Australia should cut ties with the British monarchy and become a republic, General Cosgrove says his "guiding light" would be the will of the people.

Desire to spend time in Indigenous communities

His appointment as the Queen's representative in Australia comes as the nation prepares to commemorate the centenary of the Gallipoli landing in 2015.

General Cosgrove has described his elevation to the role as a "salute" to the men and women who continue to serve in the Defence Force, saying he intends to visit various military bases during his term.

He has also expressed a desire to spend time in remote Aboriginal communities with Australian of the Year and Indigenous footballer Adam Goodes.

"I was talking with the Prime Minister about that yesterday, and if that suits his program, I think it would be a wonderful thing for Adam and I to go to see some of the stressed Indigenous communities to see what their conditions are like."

Howard praises choice of Cosgrove

Former prime minister John Howard appointed General Cosgrove as chief of the Defence Force in 2002, and has expressed his strong support.

"He and his charming wife Lynne will be magnificent occupants of Yarralumla, and I'm personally delighted and I congratulate him," Mr Howard told journalists in Sydney.

"One of the things that has impressed me about the man is his capacity to mix with all sections of the Australian community.

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"He has the common touch, but he's got strength and dignity, and that's just the right combination for such as position."

Mr Howard, who is himself an avid sports fan, also noted that General Cosgrove is a keen follower of sport.

"That's quite important in the governor-generalship of Australia - we are a sporting nation," he said.

Labor has also welcomed the appointment, describing General Cosgrove as a "capable, eminent and respected Australian".

"General Cosgrove reflects the best of Australia and its people," Acting Opposition Leader Tanya Plibersek said.

"He has dedicated his entire adult life to serving his country, inspiring others with his determination, strength and leadership."

She has also thanked Ms Bryce, saying she has represented the country with grace and honour.

"Ms Bryce is Australia's first female Governor-General and has brought a renewed sense of respect and appreciation to Australia's highest office, in particular, serving as a role model and mentor to Australian women," she said.

Republicans say wrong job for good person

The Australian Republican Movement has congratulated General Cosgrove following the announcement, but says it would be even better if there was an Australian as head of state.

"This is a case of a good person but wrong job," Australian Republican Movement chairman Geoff Gallop said.

After an almost 10-month drought and a steady flow of crises, Australia has a cleansing Test win in Perth. For Tim Paine and his team, it could be the start of the journey back into the hearts of the nation.